Volcker State Budget Report

Only two states—New Jersey and Illinois—projected asset sales to support recurring expenditures and help keep their budgets in balance in 2018. Illinois added $300 million to its budget from the proposed sale of the Thompson Center, a Chicago complex that houses state offices, stores, and restaurants, although the sale plan was later shelved. The New Jersey budget relied on $325 million in asset sales, including $321 million from the sale of excess broadband capacity. (pages 21-2)

Transfers involve significant sums in some states. New Jersey’s D average in budget maneuvers is largely due to its consistent use of this technique for all three years studied. In its fiscal 2018 budget, the state continued its longtime use of clean energy funds for general fund purposes, with the transfer of $161 million. There was a similar transfer of funds—totaling $204 million in the year—from the New Jersey Turnpike Authority to the general fund to help cover the operating expenses of New Jersey Transit, the state-owned commuter rail and bus system. (page 23)

Pensions are more generally regarded as binding contractual or even constitutional obligations and have been far more difficult to alter for current employees. And while pension obligation bonds, such as those previously used by Kansas, Illinois, and New Jersey, can raise money to lower unfunded liabilities, they merely shift debt from one arm of government to another. For states such as these, devising a durable strategy to cover retirement promises made to public workers while continuing to provide essential services is a truly arduous task. (page 29)

Kentucky and New Jersey are extreme examples of a precipitous drop in pension funding ratios. Both were at least 100 percent funded at the end of the twentieth century, but as of June 30, 2017, the unfunded liability for Kentucky’s pension systems was $42.9 billion, while New Jersey’s was $142.3 billion. That translates into a funding ratio of 33.9 percent and 35.8 percent, respectively. New Jersey began steadily losing ground in its Public Employees’ Retirement System and Teachers’ Pension and Annuity Fund at the start of this century. But the state’s problems began even before that, when Governor Christine Todd Whitman signed into law the final part of a 30 percent income tax cut in 1995. To make up for the revenue decline, the governor reduced the amount of money contributed to the pension funds and in 1997 sold $2.8 billion in pension obligation bonds at just under 8 percent interest. A plunge in stock prices between 2000 and 2002 consumed part of the funds raised through the debt sale, and New Jersey will continue to pay about $500 million annually in debt service costs for those bonds through 2029. Despite the market losses, the state boosted pension benefits by 9 percent in 2001—without any plans for covering the additional cost. In fiscal 2018, New Jersey temporarily shifted ownership of the state lottery and its proceeds to the retirement funds for teachers, public employees, and police officers and firefighters. The move made the pension system appear better funded, but the net amount being injected by the state is not scheduled to reach the ARC level until fiscal 2023. The shortfall continues to deprive the pension system of any possible earnings on the sums that actuaries say should be contributed. (pages 31-2)

Forty-five states reported a positive balance in reserve funds in fiscal 2018. The five others, which have no or minimal reserves, were Illinois, Kansas, Montana, New Jersey, and Pennsylvania. (page 35)

The problem is that no solution for the education of the children (at the time Black, now Hispanic) of poorer parents was offered by the democratically elected governments so a judicial solution was imposed, the Abbott districts. The funding of the Abbott districts might be improved as real estate driven growth hits places like Asbury Park, Neptune, Atlantic City. Of course assuming real estate driven growth is ‘real’.

Unfortunately for New Jersey pensioners, the New Jersey Supreme Court ruled in Berg v. Christie that there is no contractual right to your pension. Of course there is no constitutional right to your pension as well.
Each state is different. This is what people fail to understand. You must read the law from the state itself to ascertain any relevant pension protections.
The New Jersey court “dusted off” the old Spina case, decided in 1964, indicating that there is a property interest in the corpus ie the “body” of the pension funds. The opinion also alluded to the assumed fact that the state would not make off with the money. A very bold and idiotic assumption when dealing with the Garden State of corruption.
Eric

Game OVER! When in big hole, stop DIGGING!Kentucky and New Jersey are extreme examples of a precipitous drop in pension funding ratios. Both were at least 100 percent funded at the end of the twentieth century, but as of June 30, 2017, the unfunded liability for Kentucky’s pension systems was $42.9 billion, while New Jersey’s was $142.3 billion. That translates into a funding ratio of 33.9 percent and 35.8 percent, respectively. New Jersey began steadily losing ground in its Public Employees’ Retirement System and Teachers’ Pension and Annuity Fund at the start of this century. But the state’s problems began even before that, when Governor Christine Todd Whitman signed into law the final part of a 30 percent income tax cut in 1995. To make up for the revenue decline, the governor reduced the amount of money contributed to the pension funds and in 1997 sold $2.8 billion in pension obligation bonds at just under 8 percent interest. A plunge in stock prices between 2000 and 2002 consumed part of the funds raised through the debt sale, and New Jersey will continue to pay about $500 million annually in debt service costs for those bonds through 2029. Despite the market losses, the state boosted pension benefits by 9 percent in 2001—without any plans for covering the additional cost.
So funny! NJ is going to be a MAJOR case at he Harvard Business School- on how to screw up a state, royally!

Click here for a spreadsheet of payouts from 2004 sorted by recipient and date paid through December, 2018 as taken from Union County Check Registry data. Some of the familiar names are in additional worksheets in the file. Among them: UC IMPROVEMENT AUTHORITY: $29,508,883 NETTA ARCHITECTS, LLC: $7,373,412 T & M ASSOCIATES: $6,446,497 NEGLIA ENGINEERING […]